The National Law Journal spoke to Partner Eric J. Belfi about the challenges plaintiffs' firms face in pursuing litigation against Chinese firms.

Chinese stocks—including the ones listed in the United States—have tumbled since Chinese president Xi Jinping was confirmed as the country’s leader for an unprecedented third term while choosing Communist party allies over global financial experts as members for the Politburo standing committee.

However, volatility is not the only risk linked to owning Chinese stocks that are traded on U.S. stock exchanges.  Plaintiffs firms have sued several Chinese companies in recent years over alleged fraud related to artificially undervalued stock offerings.

“The issue from a plaintiffs perspective is: even if you have fraud, the real issue is to try to find where the money is,” Belfi said.  As most Chinese companies are incorporated in the Cayman Islands, Bermuda or the British Virgin Islands, jurisdiction can be a challenge.